S. Korea’s Goldstar to Buy 5% of Zenith
Struggling Zenith Electronics Corp., the last American manufacturer of televisions, announced Monday that Goldstar Co. of South Korea will buy a 5% stake in the company for $15 million and license some Zenith technology.
The transaction could help Glenview, Ill.-based Zenith fend off a potential takeover bid by Nycor Inc., a New York investment company that owns 8.2% of Zenith shares and has said that it is contemplating a buyout. It also represents an endorsement of Zenith’s high-definition television technology, which the company is counting on for growth and profit.
But trade policy analysts also saw the move as another indication of the feeble state of the American consumer electronics business. They noted that such agreements had in the past resulted in the transfer of U.S. technology to Asian competitors.
“It’s pretty pathetic that American technology can’t be supported by American capital,” said Clyde V. Prestowitz Jr., a former U.S. trade representative and now president of the Economic Strategy Institute, a Washington think tank.
He added, however, that the deal might represent “the best of a bad situation” for Zenith by helping it keep its technology development alive. Zenith lost $25.5 million in the fourth quarter of 1990 on revenue of $377.8 million. It posted a $63.3-million loss for the year after losing $68.4 million in 1989.
Goldstar, one of the world’s largest consumer electronics companies, will license a new Zenith picture tube technology called flat-tension mask. Zenith already uses the FTM technique for computer monitors, which are not covered by the licensing arrangement. It considers it an important part of its strategy for HDTV, a high-quality television system that will be launched in the mid-1990s.
Terms of the licensing agreement were not disclosed, but Zenith spokesman John Taylor said it was non-exclusive. It imposes a limit on the sale in the United States of Goldstar products that use the FTM technology, he added.
Together with AT&T;, Zenith is developing an HDTV broadcasting technology that it hopes the Federal Communications Commission will adopt as the U.S. standard. As part of the agreement announced Monday, Goldstar will support the Zenith/AT&T; system as the standard in Korea.
Goldstar will also provide unspecified “engineering services”.
